Key Moving Averages Give Way
Natural gas broke below key near-term support on Monday, shifting the short-term outlook bearish and raising the risk of a deeper pullback toward $3.00 and the rising 50-day moving average. The 200-day moving average at $3.08 was broken following eight days of consolidation and a failed attempt to extend to new highs last week. At the time of writing, a 10-day low of $3.03 was reached, and the break below the 200-day moving average was on track for confirmation with a daily close below the average. In addition, short-term bearish implications were signaled by a break below the 20-day moving average near $3.13 earlier during Monday’s session. Together, these breaks indicate weakening momentum after the recent consolidation.
Failed Breakout Strengthens Bearish Case
Last week’s high of $3.33 was the second test of resistance near the September high of $3.32. Natural gas failed to break through that zone, and seller subsequently took back control, as evidenced by Monday’s bearish price action and break below the 200-day moving average. That high is now a lower swing high, as the trend failed to advance above the July lower swing high of $3.40. A failed breakout sometimes results in a sharp move in the other direction, raising the risk of a deeper retracement before buyers can regain control. This failure to extend the advance reinforces the importance of the lower support levels now coming into focus.
$3.00–$2.95 Support Zone Comes Into View
Trading below the 200-day moving average retains a short-term bearish outlook, with lower potential support levels defined by the 78.6% Fibonacci retracement at $3.00 and the 50-day moving average near $2.95 and rising. Recently, the 50-day moving average has aligned with the lower boundary of the channel, adding to its significance as a possible lower target. However, because the average is rising, it could converge with or approach the Fibonacci level before price reaches that area, creating a potential zone of support rather than two distinctly separate targets. A reaction at this confluence could help determine whether the broader rising channel remains intact.
Reclaiming $3.08 Is First Step Toward Recovery
If the rising channel structure is retained following a deeper pullback, natural gas may make another attempt to challenge resistance near recent highs. The 200-day moving average is the first key resistance level that needs to be reclaimed to improve the near-term outlook. However, given recent price action, a quick reclaim of the 200-day moving average would be difficult to rely on before additional consolidation. For now, the breakdown shifts attention to $3.00 and the rising 50-day moving average near $2.95, where support could determine whether natural gas resumes its broader advance or remains under bearish pressure.
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